Emmforce Autotech Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Automotive Components |
| Sub-class | Drivetrains, Differentials |
| Location | Baddi, Himachal Pradesh |
| Establishment Year | 2012 |
Management
| Managing Director | Mr. Ashok Mehta |
| Educational Qualifications | Chartered Accountant, Bachelor of Commerce |
| Experience | 32 years of experience in the automotive industry |
| Annual Salary | 120 Lakhs |
| Total Number of Employees | 128 |
About
Emmforce Autotech Limited (EAL) specializes in manufacturing niche automotive drivetrain parts. They primarily cater to the 4-wheel Drive and performance racing vehicle market
Products:
Differential Forged and Cast Parts: This range encompasses components like Differential Housings, Differential Lockers, Differential Covers, Gear Shifters, Yokes, Differential Spools, and Pinion Supports. These parts are crucial for transferring power from the engine to the wheels and are manufactured under one roof, giving Emmforce a competitive edge.
Hubs and Spindles: These parts, essential for wheel rotation and steering, are meticulously engineered by Emmforce.
Differential Tools: Emmforce manufactures specialized tools designed for the assembly, maintenance, and repair of differentials.
The company prides itself on using a fully integrated engineering approach that spans from conceptualization to manufacturing.
Raw Materials:
The company sources its raw materials, tools, and consumables from trusted and reputable manufacturers and suppliers within India to ensure quality, taking advantage of locally available resources, and ensuring a steady and reliable supply chain.
Expansion:
EAL’s production facility is located in Baddi, Himachal Pradesh, operating on a leased property with a remaining lease period of over 83 years. The company is planning to expand its production capacity significantly by establishing a new manufacturing plant in Kansal, Himachal Pradesh.
Clients:
Consumers of EAL’s products and services are primarily businesses operating within the automotive sector, particularly those involved in manufacturing:
4-wheel drive vehicles
Performance racing vehicles
Work Flow Chart
Revenue – Category
Revenue – Region
Audit and Legal
No material qualifications on the restated financial statements for the periods ending October 31, 2023
There are no contingent liabilities as of October 31, 2023
The company is facing a notice of discrepancy in the Goods and Service Tax (GST) returns for FY 2019-20. with a discrepancy amount of ~25 Lakhs
SWOT Analysis
Strengths
| Diverse product range of drivetrain parts manufactured under one roof and revenue is not concentrated on any single product. |
| Manufacturing of niche parts with limited competition. |
| Strong long-term customer relationships. |
| A diverse customer base enables the company to understand upcoming requirements. |
| Proactive, market and customer-centric approach aiding in customer retention. |
Weaknesses
| Low bargaining power with suppliers due to low sales volume for some parts. |
| Lacks further vertical integration on the raw material side to maintain quality. |
Opportunities
| Significant growth potential in the company’s product segment with global OEMs and product distributors. |
| Growth potential in untapped segments, including agriculture, off-road vehicles, EVs, railways, and defence. |
Threats
| Intense competition in the automotive components industry could impact pricing and market share. |
| Volatility in raw material prices affecting profitability. |
Porter’s Five Forces1
| Threat of New Entrants | LOW |
| Emmforce Autotech Limited’s expertise in a specialized field, manufacturing drivetrain parts, could act as a barrier to entry. The company has over a decade of experience and has developed specialized knowledge in axle shafts |
| Bargaining Power of Suppliers | MODERATE – HIGH |
| Their top ten suppliers accounted for a significant portion of their purchases, 85% and Emmforce prioritizes sourcing raw materials from reputable and reliable manufacturers and suppliers. These factors increase the supplier’s bargaining power. |
| Bargaining Power of Buyers | MODERATE |
| Strong Long Term Customer relationships and diverse customer base. |
| Threat of Substitute Products or Services | LOW |
| Emmforce Autotech Limited manufactures essential components (drivetrain parts) for the automotive industry. |
| Rivalry Among Existing Competitors | LOW – MODERATE |
| Emmforce Autotech Limited benefits from a diverse product range with customization, including niche parts with limited competition. The company also has strong, long-term customer relationships. |
Peer Comparison
Divgi Torqtransfer Systems Ltd, a listed company within the same industry can be considered as a peer for comparison and it is currently in a stronger financial position compared to Emmforce Autotech Limited as per the metrics.
| Particulars | Emmforce Autotech Limited | Divgi Torqtransfer Systems Ltd |
| Results Type | Standalone | Standalone |
| RoNW (%) | 18.71% | 9.28% |
| EBITDA Margin | 20.90% | 30.29% |
| PAT Margin | 9.60% | 18.88% |
Green Box
Strategic acquisitions: Emmforce recently acquired an 80% stake in Emmforce Mobility Solutions Pvt. Ltd. (EMSPL) and intends to invest ₹10 Crores. It is a manufacturer of electric tractors and parts. This strategic move enables Emmforce to enter the growing market of electric vehicles, aligning with its focus on innovation and expansion into new sectors.
Government Support: The Indian government has implemented policies promoting the auto component industry’s growth, including Production Linked Incentive (PLI) schemes to boost domestic manufacturing and attract foreign investments.
Global Opportunities: India’s potential to become a global auto component manufacturing hub. Factors contributing to this include the availability of skilled labour, cost advantages, and a robust supplier base.
Expansion into new markets: Emmforce plans to expand its product availability in more countries, targeting untapped markets like Europe, South America, Africa, the Middle East, Asia Pacific, and India
Developing new products: Emmforce is actively engaged in developing new, niche, and proprietary products, with a recent example being the Hydraulic Gear Pump for Dump trucks. Their engineering team is also exploring opportunities in the electric vehicle (EV) space and plans to introduce a new product for EVs.
Entering new industry segments: Emmforce sees significant growth potential in untapped segments like Agriculture, Off-Highway vehicles, EVs, railways, and defence. They aim to leverage their expertise and experience in manufacturing drivetrain parts to cater to the specific needs of these sectors.
The company focuses on providing its clients with a one-stop shop for all their drivetrain needs. This helps to simplify the buying process for customers and reduces the need to manage multiple suppliers.
Emmforce Autotech Limited uses a multi-channel distribution strategy. This includes direct sales, online sales, and a network of distributors. They provide their customers with various payment options, flexible delivery options, and complete tracking details to ensure a positive customer experience.
Emmforce Autotech Limited has demonstrated a positive cash flow from operating activities in recent years, indicating a healthy financial position.
Amber Box
Current Capacity Utilization:
Hubs & Spindles has 67% and Differential Cast Parts has 84% but remaining categories like differential forged parts and other parts have very low capacity utilization hovering around 30%
Emmforce Autotech Limited is exposed to foreign exchange risks because the majority of its revenue from operations is in foreign currencies.
Red Box
Emmforce Autotech Limited had a long-term debt-to-equity ratio of .31 and a total debt-to-equity ratio of 1.56.
Emmforce Autotech Limited operates in a highly competitive business and lacks the advantage of economies of scale.
Images
- For Porter’s Five Forces, the force value of “LOW” is considered good. ↩︎
Disclaimer: The above information/document is based on publicly available sources and has been issued solely for educational and informational purposes and should not be considered as investment advice or as a Buy/Sell recommendation, or as a research report. Although due diligence has been done to ensure the accuracy of the data presented, the website or authors are not responsible for any decision arising out of an inadvertent mistake or error in the data presented on the website. The authors may also have equity shares in the companies mentioned in this report adhering to provisions of regulation 16 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The investor is advised to consult his/her investment advisor and undertake further due diligence before making any investment decision in the companies mentioned. Authors are not liable for any financial gains or losses due to investments made as per the information provided on this website (StocKernel.com).